Item 1. Business
Item 1. Business
Overview
Fly-E Group, Inc. (“Fly-E Group,”
and collectively with its subsidiaries, the “Company,” “we” or similar terminology), is an electric vehicle (“EV”)
company that is principally engaged in designing, installing and selling smart electric motorcycles (“E-motorcycles”), electric
bikes (“E-bikes”), electric scooters (“E-scooters”) and related accessories under the brand “Fly E-Bike.”
At Fly E-Bike, our commitment is to encourage people to incorporate eco-friendly transportation into their active lifestyles, ultimately
contributing towards building a more environmentally friendly future.
Our first store was established in 2018 in New York. Our business
has grown rapidly since then and we believe we are now one of the leading providers of E-bikes for food delivery workers in New York
City. As of June 27, 2024, we have 40 stores, including 39 stores in the United States and one store in Canada. We also operate one
online store at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters, serving customers in the United States. In addition,
we plan to open a second online store focusing on selling gas bikes in the future. We plan to expand our presence in the United States
and extend our business into South America and Europe.
We have a diversified product portfolio that is designed to satisfy
the various demands of our customers and address different urban travel scenarios. Additionally, we aim to refresh our product offerings
continuously to align with evolving market trends. As of June 27, 2024, we offered 21 E-motorcycle products, 21 E-bike products and 34
E-scooter products.
We build our smart E-bikes based on advanced and
innovative technologies, including smart technologies, powertrain and battery technologies and automotive inspired functionalities. Adhering
to our user-centric philosophy in product design, we collect user feedback and product performance data to develop new products or functionalities
to satisfy unmet demand. All our products are designed to embody themes of style, freedom and technology. Some of our E-bikes are specifically
designed for food delivery workers and are featured with longer battery life and stable backseat for holding a basket. In addition, we
designed an easy battery swap system for these E-bikes, allowing food delivery workers to easily replace a fully charged battery at any
of our stores within a minute.
Our net revenues were approximately $32.2 million
for the year ended March 31, 2024, consisting of retail sales revenue of approximately $26.4 million and wholesale revenue of $5.8 million.
Our net revenues were approximately $21.8 million for the year ended March 31, 2023, consisting of retail sales revenue of approximately
$18.8 million and wholesale revenue of approximately $2.9 million.
Recent Developments
Stock Split
In April 2024, we effected a stock split of our
authorized and all issued and outstanding shares of our common stock and preferred stock at a split ratio of 1-for-110,000,
where the par value of the Company’s common stock remained unchanged at $0.01 per share, and the number of authorized shares of
the Company’s capital stock was increased from 440 to 48,400,000, with the number of authorized shares of common stock and preferred
stock being increased from 400 to 44,000,000 and from 40 to 4,400,000, respectively. The issued and outstanding shares of our common
stock immediately following the split were increased to 22,000,000. The
share number and related data in this annual report has been updated to reflect the stock split referenced above.
Initial Public Offering
On June 7, 2024, we sold 2,250,000 shares of common stock, at a price
of $4.00 per share in our initial public offering (the “IPO”). The gross proceeds of the offering were $9.0 million, prior
to deducting the underwriting discounts, commissions and offering expenses payable by the Company. In addition, we granted the underwriters
a 30-day option to purchase an additional 337,500 shares of common stock at the initial public offering price, less underwriting discounts
and commissions, to cover over-allotments. On June 25, 2024, we sold an additional 337,500 shares of common stock to the underwriter of
our IPO for gross proceeds of $1.4 million upon full exercise of the overallotment option. Net proceeds received by us from our initial
public offering, including the exercise of the over-allotment option, were approximately $9.2 million. We also issued to The Benchmark
Company, LLC, the representative of the underwriters, and its designees warrants to purchase 129,375
shares of our common stock.
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Our History and Corporate Structure
We initially started our business in 2018 as Ctate
Inc. (“Ctate”), a New York corporation. Our business has experienced rapid growth since then and we opened multiple retail
stores within a short period of time. In the interest of efficient management, each retail store was managed by a separate company wholly
owned by Ctate.
Fly E-Bike, Inc. (“Fly E-Bike”), a
Delaware corporation, was a wholly owned subsidiary of Ctate incorporated on August 22, 2022. On September 12, 2022, Ctate and
Fly E-Bike entered into an Agreement and Plan of Merger, pursuant to which Ctate merged into and with Fly E-Bike, with Fly E-Bike being
the surviving corporation.
Fly-E
Group, a Delaware corporation, was incorporated on November 1, 2022. On December 21, 2022, Fly E-Bike, the stockholders of
Fly E-Bike and Fly-E Group entered into a Share Exchange Agreement, pursuant to which Fly-E Group acquired all of the issued and outstanding
shares of Fly E-Bike by issuing its shares to the stockholders of Fly E-Bike on a one-for-one basis (the “Share Exchange”).
As a result of the Share Exchange, Fly E-Bike became a wholly owned subsidiary of Fly-E Group. Fly-E Group has no substantive operations
other than holding all of the issued and outstanding shares of Fly E-Bike and Fly EV, Inc. Our business is primarily conducted through
Fly E-Bike and its subsidiaries. Fly EV. Inc. is a Delaware corporation incorporated on November 1, 2022 and currently has no substantive
operations.
Our
Industry
E-motorcycles, E-bikes and E-scooters are the
two-wheelers that run on electric energy that is converted into mechanical energy rather than running on fuel. They are chargeable and
eco-friendly automotive solutions. E-motorcycles and E-bikes are built with solid metal and fiber frames that are combined with mechanical
and electronic components. An E-scooter is a plug-in EV powered by electric power. These scooters offer additional advantages such as
agility, flexibility, versatility and ease of maneuver in high traffic congestion areas.
The EV industry has been experiencing significant
growth and innovation in recent years. With the advancement of technology and the increasing demand for environmentally friendly
transportation options, E-bikes, E-motorcycles and E-scooters have become popular choices for commuting, leisure and sports. As the demand
for sustainable transportation options continues to grow, the EV industry is poised for further growth and development.
Some of the major trends driving the growth of
the EV industry include the increasing demand for sustainable transportation options, advancements in battery and motor technology, and
the growing popularity of E-bike sharing services. Government incentives and regulations, such as tax credits and subsidies for the purchase
of EVs, are also driving the growth of the industry.
The Asia-Pacific region is the largest market
for the electric two-wheelers due to the growing awareness about the benefits of electric vehicles, rising personal disposable income,
growing demand for affordable electric vehicles for short-distance commuting and increasing adoption of smart technologies. We believe
that North America is expected to experience significant growth in the future due to growing government initiatives to raise awareness
of such products among individuals.
City bikes and city E-bikes are popular in big
cities in the United States, such as New York City, Miami and Dallas. There is also a growing popularity of E-scooters as an
increasing number of EV merchants are launching their businesses in these cities.
The growth of the EV industry is further accelerated
by the rise in small package deliveries in big cities. New York City is a major commercial hub and the largest metropolitan area
in the United States. As a result, the volume of small package deliveries in New York City is remarkably high, and it has continued
to grow over the years. With the rise of E-commerce and online shopping, more and more people in New York City are relying on
package deliveries for their everyday needs, leading to a significant increase in small package delivery volume. The COVID-19 pandemic
has further accelerated this trend as more people have turned to online shopping.
The high volume of package deliveries in New York
City has led to concerns about traffic congestion and delivery vehicle emissions, which the city is working to address through initiatives
such as congestion pricing and EV incentives. For short-distance deliveries within urban areas, E-bike delivery can be a more efficient
and environmentally friendly option compared to truck delivery. E-bikes can navigate through congested city streets, often taking shorter
routes that trucks cannot access, and deliver packages quickly without contributing to traffic congestion or air pollution. Additionally,
E-bikes are often cheaper to operate and maintain than trucks. We expect that other large densely populated cities in the United States,
such as Miami and Dallas, face similar challenges and will continue to adopt the use of E-bikes, E-motorcycles, and E-scooters to meet
their delivery needs.
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Our Strengths
Early Entry into the Market: We
entered the EV market early and were able to seize the market opportunities to experience rapid growth. We started our business in 2018
and were able to leverage the potential created by the thriving E-commerce industry. Additionally, the COVID-19 lockdown further
amplified the demand for online food and essential item deliveries, creating a favorable environment for the expansion and utilization
of EVs, particularly E-bikes, which further accelerated our business growth.
Brand Reputation: We
have a strong brand reputation for consistent delivery of high-quality EV products and excellent customer service. Our brand and
retail stores have become reliable business partners for most food delivery workers, especially in New York City. As a result, they
have come to recognize our name and trust our services, establishing a loyal customer base for us.
Innovative Products and Services: We
continue to offer innovative, differentiated products and services that help set us apart from our competitors. Since 2018, we have launched
over 67 new products and introduced new versions to our existing products with upgrades to design, motor and battery technology. Additionally,
we are developing the Fly E-Bike app, which will be used by customers to better manage and enjoy their riding experience. We are
also developing the Fly E-Bike Care, an extended warranty program that will provide value-added options for our customers in
the near future.
Our Strategies
Our plan to grow our business using the following
key strategies:
Enhance our position as a leader in urban
mobility: We believe we are one of the leading providers of urban mobility solutions for New York
City, particularly for food and package delivery workers. We intend to leverage this first mover advantage to continue to solidify our
market leadership, by enhancing our brand, continuing to innovate, growing our product and service portfolio and expanding our sales network.
Improve brand recognition: We
will maintain our commitment to providing exceptional customer service as a means of further enhancing our brand. We will provide an enhanced
shopping experience by effectively managing and upgrading our retail stores. In addition, we plan to open more flagship stores in high-traffic retail
locations in New York City and other major cities in the United States to further elevate the quality of our brand messaging.
Furthermore, we plan to increase our offerings of accessories, such as introducing more style options to our branded apparel, to further
strengthen our customers’ connection to Fly E-Bike. We also intend to collaborate with other lifestyle brands across different industries
to further promote our brand image.
Continue our innovation: We
will persist in advancing our product line by incorporating cutting-edge design, optimizing user experience and delivering optimal
performance. We are developing our Fly E-Bike app, which we plan to include functions to improve the communication between our customers
and our products. Additionally, we plan to launch Fly E-Bike Care in the near future, a service designed to function as an insurance
policy and provide customers with continuous maintenance services beyond the manufacturer and battery warranty period.
Expand our sales network: We plan
to further expand our sales network in the United States and internationally. As of June 27, 2024, we operate one store in Canada
and 39 retail stores in the United States, spanning across the states of New York, Texas, Florida, Washington D.C., California
and New Jersey. We also operate one online store at flyebike.com, focusing on selling E-motorcycles, E-bikes and E-scooters, serving
customers in the United States. In addition, we plan to open a second online store focusing on selling gas bikes in the future.. We plan
to significantly increase our footprint in the United States by opening our stores in additional states. In addition, we intend
to enter selected overseas markets that offer identified growth opportunities and favorable government policies, such as South America
and Europe.
Diversify our service offerings: We
are planning to broaden our business by leveraging our existing retail stores as logistics hubs for small package delivery. We are currently
in the process of seeking business partners, assembling a delivery team and developing an app for the delivery business.
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Our Products
We offer a diverse product portfolio that satisfies
various demands of our customers and addresses different urban travel scenarios. Following market trends and technological updates, we
continuously develop and add new products into our portfolio to meet our customers’ needs. We also regularly introduce upgrades
and refreshes to our existing models.
E-motorcycles
Our E-motorcycle category consists of 21 different
products, which include a range of E-moped, E-motorcycle and E-tricycle.
E-moped
(Fly-7)
(Fly-10)
(Fly-Pro)
Our E-moped product line is one of our most popular,
featuring a range of eight different models. Our E-mopeds can run an average of 20-70 miles on a single charge, with a top speed
of 20-38 miles per hour. Additionally, our E-mopeds are capable of holding a payload of 185-400 pounds. Each E-moped offer several
standard features, including a remote key fob, alarm system, lockable under-seat storage, front and rear suspension, and a complete lighting
package. Some models also offer a USB phone charging port for added convenience. These features make them an ideal choice for delivery
workers.
All of our E-mopeds feature a low seat height
and large tires, providing excellent stability at all speeds and on all surfaces. Moreover, their electric drivetrain requires no clutch
or gears, making them easy to operate for almost anyone.
E-motorcycle
(RZ)
(FTC)
(DY-VNM SL)
We also offer E-motorcycles that are designed
for urban commuting and city riding, offering a range of 25-80 miles on a single charge and a top speed of 30-59 miles per hour.
They have a payload capacity of 160-400 pounds and feature a powerful electric motor with multiple riding modes to choose from. Additionally,
our E-motorcycles are equipped with advanced safety features, including anti-lock brakes and a high-performance suspension system, ensuring
optimal handling and rider safety.
E-tricycle
(Fly-Tricycle)
The Fly-Tricycle is an electric three-wheel vehicle
that offers three seats. The interior of this vehicle is crafted with high-quality automotive-grade materials, ensuring long-lasting durability.
This vehicle can run a range of 43-62 miles on a single charge, with a top speed of 30 miles per hour. Additionally, the Fly-Tricycle
is capable of holding a payload of 1,239 pounds.
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E-bikes
We currently offer 34 different E-bike products,
which include a range of City E-bike, foldable E-bike and standard E-bike.
City E-bike
(City E-Bike)
Our City E-Bike has a range of 15-20 miles
on a single charge and a maximum speed of 20 miles per hour. It has a payload capacity of 200 pounds and an under-seat storage area.
Foldable E-bike
(Dolphin E-Bike)
(Air-2)
Our foldable E-bikes, including the Dolphin E-Bike
and the Air-2, are versatile and convenient for folding. They are capable of running 20-25 miles on a single charge with a top speed
of 23 miles per hour. In addition, our foldable E-bikes have a payload capacity of 250 pounds. They are compact, portable and easy to
store, making them a good choice for people who are conscious of space limitations, such as those who live in small apartments in big
cities.
Standard E-bike
(Sword Fish E-Bike)
(Rhino)
Our standard E-bikes are designed to be lightweight
and come in a variety of different outlook designs, with multiple speed options to choose from. They offer a range of 20-60 miles
on a single charge, with a top speed range of 15-32 miles per hour, and have a payload capacity of 180-250 pounds.
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E-scooters
Our E-scooter segment currently
offers 12 different products, which include the Insurgent E-Scooter, Flytron, H-Max and H-1 models.
(Insurgent E-Scooter)
(Flytron)
(H-Max)
(H-1)
Our E-scooters offer a range of 15-45 miles
on a single charge and a top speed range of 15-40 miles per hour. They are also capable of holding a weight range of 250-330
pounds. Additionally, our smart E-scooters are equipped with hydraulic disc brakes made from special alloys. The brake discs are slotted
to extend the life of the system. The hardware of the brakes is complemented by the electronic braking system, which provides for
intelligent braking and recycling kinetic energy. Certain of our models also employ the combined braking system, which splits braking
force between the front and rear discs to shorten the braking distance at higher speeds.
Accessories and spare parts
We offer a comprehensive line of Fly E-Bike branded
accessories and spare parts. We also sell traditional bikes.
For accessories, we offer riding gear, such as
raincoats, gloves and knee pads, and accessories that can be installed on our products to enhance their functionality, such as storage
baskets and tail boxes, smart phone holders, backrests and locks, among others. We also sell branded apparel.
In addition, we provide performance upgrades,
including high-performance upgrade components for wheels, shock absorbers, brake calipers and carbon fiber body panels, among others.
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Fly E-Bike App
We are currently developing the Fly E-Bike app,
which is a management service mobile software for our EVs. We aim to design an app that will bring users a comprehensive intelligent
experience to create a safer and more satisfying riding life. The development of the app is still in its preliminary stage. We have launched
a testing version of the app, which is currently unavailable to our customers. Once development is completed, the app is expected to include
functions such as GPS, navigation, battery and tire pressure management, online shopping, and anti-theft features.
After Sales Services
Our EVs are primarily serviced through our retail
stores, which provide repair, maintenance and bodywork services. Our regular maintenance services include exterior check, mechanical structure
service, motor system check, electrification service, battery maintenance service, tire pressure check and cleaning services. We also
provide other value-added services through our retail stores, including GPS add-on and installation, and theft reporting.
Warranty Policy
Manufacturer Warranty
We offer a three-month limited manufacturer’s
warranty on all models of our E-bikes, E-motorcycles and E-scooters. The warranty period starts on the day the product is delivered
to the customer. This warranty only covers limited factory defects and minor cosmetic damages. It does not cover misuse or broken parts
caused by the user or by any other events.
Battery Warranty
We also offer a three-month warranty on battery
for any manufacturer defect in material or workmanship. If a battery becomes faulty within the specified warranty period, we will replace
it free of charge.
Fly E-Bike Care
We plan to launch our value-added Fly E-Bike Care
program in the near future, which will function as an insurance policy to provide customers with continuous maintenance services beyond
the warranty period mentioned above. This program will be designed to offer a wider range of coverage than the manufacturer and battery
warranties, including accidental damages caused by customers. Additionally, we intend to add a “Fly E-Bike Care” feature to
our app, which will send maintenance reminders to users based on their driving behavior and mileage.
Manufacturing and Assembly
We source a significant portion of our vehicle
components from China and the United States. For the years ended March 31, 2024 and 2023, over 50% and 40% of the parts were
sourced from China, respectively. For the year ended March 31, 2024 and 2023, we sourced over 40% and over 50% of our vehicle components
from the United States, respectively. Although we rely on certain principal vendors in China and the United States for most
of our components, we believe there are multiple sources for each of our critical components.
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To ensure a secure and reliable supply chain,
we have implemented a centralized vendor management system that consolidates all vendor management activities under a centralized team.
This approach enables us to streamline our purchasing process, enhance our negotiating power and maintain better relationships with our
vendors.
We are currently working with three principal vendors, Depcl Corp.(previously
known as Fly Wing E-Bike Inc.), Xiamen Innolabs Technology Co., Ltd. (“XFT”), and Anhui Ineo International Trading Co., Ltd.,
each of which respectively supplied approximately 36%, 21% and 13% of our accessories and components during the year ended March 31, 2024.
During the year ended March 31, 2023, our top three principal vendors included Transpro US Inc., Anhui Ineo International Trading Co.,
Ltd. and Depcl Corp, each of which respectively supplied approximately 33%, 21% and 12% accessories and components. Our principal vendors
are responsible for sourcing all the parts used in our vehicles from various suppliers, and they also oversee the quality control process.
We maintain close relationships with our principal vendors to ensure that we have access to high-quality accessories and components for
our EVs at competitive prices and receive reliable and timely deliveries. We work closely with them to improve our supply chain efficiency
and reduce costs.
Our centralized vendor management system also
helps us to manage risk more effectively by identifying potential risks and developing strategies to mitigate them. Rather than dealing
with the original suppliers, we monitor the performance of our principal vendors, which enables us to quickly identify and address any
problems and manage the supply resources more efficiently. Our system ensures each critical product component is supported by at least
three vendors, thereby minimizing the risk of supply chain disruptions. This approach helps us to reduce the risk of supply chain disruptions,
which can have a significant impact on our business operations.
After importing the accessories and components,
we assemble them into our vehicles in a leased facility located in Brooklyn, New York. For the year ended March 31, 2023, we
produced 2,039 E-motorcycles, 5,953 E-bikes and 2,279 E-scooters in this facility. For the year ended March 31, 2024, we produced 8,390
E-motorcycles, 7,638 E-bikes and 3,171 E-scooters at the same facility. In response to the increasing demand for our products, we are
currently looking to lease a larger assembling facility to replace our current facility in the near future.
Quality Control
We believe that the quality of our products is
crucial to our continued growth. We place great emphasis on quality control and have implemented stringent monitoring and quality control
systems to manage our operations.
For
the parts sourced from China, we rely on our one of our principal vendors in China, XFT, to monitor the factories responsible for manufacturing
these parts used in our vehicles. Its duties include the following:
Factory check: XFT
is responsible for confirming the size, production capacity and certification qualifications of a factory, confirming whether the equipment
required for the production line is complete and whether the testing equipment is complete, checking the factory’s quality assurance
process and other quality control procedures.
Proofing: After
the samples that meet the requirements are confirmed by XFT and us, they will be sealed as golden samples, and mass production is required
to follow the golden sample standard.
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Mass production: Before
the start of mass production, the factory is required to develop and review standard operating procedures and quality assurance standards
that are acceptable to XFT and us. XFT will closely follow the production process, ensuring that strict quality control measures are implemented
at every stage of production. After the mass production starts, XFT will perform the first article inspection to confirm whether the mass
production meets the required standards.
Inspection: After
mass production, in addition to requiring the factory to submit a quality control report, XFT will send its own quality control personnel
to conduct random inspections on the products according to the corresponding standards of acceptable quality level.
We also source certain parts used in our vehicles
from the United States. For these parts, our U.S. principal vendors and our quality control team perform quality control procedures
similar to those discussed above for our China-sourced parts. This includes ensuring that the parts meet our quality standards and specifications,
as well as conducting regular factory audits and inspections to identify any potential issues, and ensure ongoing compliance with our
requirements.
We have not experienced any significant product
recall, refunds or other quality control outbreak since we commenced operations.
Sales and Marketing
We have established an omnichannel retail model network to sell our
products and provide services to our customers. We currently operate 39 retail stores and work with 80 distributors in the United States
to sell our products. In addition, we have our own online store where we promote and sell our products. Our Fly E-Bike app, which is under
development, can also become a venue where we can advertise our products. We also leverage our omnichannel retail network to deliver maintenance
and repair services at our retail stores and to collect data for business insights.
We focus on promoting awareness of our brand as
a lifestyle brand with high-quality smart E-bikes, E-motorcycles and E-scooters. Our brand and products are marketed to retail customers
through digital and experiential activities as well as through more traditional promotional and advertising activities. We aim to engage
in cost-effective marketing activities by taking advantage of social media and to build an online and offline ecosystem of users that
will promote awareness of our brand.
One key component of our strategy is to expand
our presence on social media platforms. We currently have accounts on Facebook, Instagram, TikTok and WeChat, on which we frequently post
guides, videos and tutorials that educate people on how to use and maintain E-bikes, E-scooters and E-motorcycles, as well as benefits
of E-mobility.
In terms of offline marketing, we prioritize in-store
promotions and targeted advertising. This includes offering discounts and special deals in our retail stores, as well as using targeted
advertising to reach potential customers who are likely to be interested in our products. We also place ads in local newspapers and magazines
and distribute flyers on the streets to promote the opening of new stores. Additionally, our products have gained significant visibility
among food delivery workers in New York City, who make up the majority of our customer base. The increasing trend of people ordering
food delivery, particularly during and after the COVID-19 lockdown, has contributed to the widespread visibility of our products in the
cities.
Our Distribution Channels
Retail Distribution Network
Our sales are conducted through both retail stores
and distributors.
Out of our 39 retail stores in the United States,
28 are situated in New York, while four are in New Jersey, two in Florida, two in Texas, one in California and one in Washington,
D.C. We also operate one retail store in Canada. Our retail stores adopt a consistent design and layout and provide a consistent shopping
experience. We closely monitor the sales performance, service level and activities within our retail stores. We will continue to collect
store operation data such as consumer traffic flow and traffic flow sources, test drive frequencies and sales conversion rate. This information
helps us adjust store-specific retailing and marketing strategies, thereby increasing per store sales.
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In terms of our distributors, most of them are
located in the United States. Our distributors purchase products from us at a wholesale price, and are responsible for the logistics,
warehousing and distribution to other retail stores. We do not charge any initial fees or continuing fees to our distributors. The majority
of our distributors make full payments upfront for their orders, which helps us improve cash flow management.
We intend to expand our overseas market and are
currently working with one distributor in the Dominican Republic.
Online Distribution Network
All of our products can be purchased on our website, flyebike.com.
In addition, we plan to open a second online store focusing on selling gas bikes in the future.
We have adopted an online to offline model that
enables us to seamlessly integrate the online and offline networks to provide a cohesive and consistent experience to our customers. The
online platform acts as a conduit for influencing customers and directing sales to our retail stores. Our customers can conveniently place
orders online and pick up their products at our retail stores.
Our Customers
We
acquire customers through multiple channels, including (i) referrals from our existing customers, (ii) our distributors, and
(iii) our marketing and promotional activities. Due to our strong brand image, loyal customer base and evolving product portfolio,
we believe there are significant growth opportunities across these channels. No customers account for more than 10% of our revenues for
the years ended March 31, 2024 and 2023. The majority of our customers are food delivery workers in New York City. This
group constitutes approximately 70% and 70% of our customer base
for the year ended March 31, 2023 and 2024, respectively.
Environmental Matters
We are subject to federal, state and local environmental
laws and regulations that impose limitations on the discharge of pollutants into the environment and establish standards for the handling,
generation, emission, release, discharge, treatment, storage and disposal of certain materials, substances and wastes and the remediation
of environmental contaminants (collectively, “Environmental Laws”). In the ordinary course of our assembling processes, we
may use materials or generate waste that are subject to these Environmental Laws.
We endeavor to adhere to all applicable Environmental
Laws and act as necessary to comply with these laws. We maintain an environmental and safety program at our facilities. The environmental
and safety program includes obtaining environmental permits as required, capturing and appropriately disposing of any waste by-products,
tracking hazardous waste generation and disposal, air emissions, safety situations, material safety data sheet management, storm water
management and recycling, and auditing and reporting on its compliance.
Intellectual Property
We currently hold one trademark in the United
States, which covers our logo. We also hold four trademarks in China, which cover the names “FLY E-BIKE”, “FLY EBIKE”,
“FLYEBIKE” and our logo. Additionally, we have two trademarks in the Dominican Republic covering the name “FLY E-BIKE”
and our logo, and one trademark in Panama covering the name “FLY E-BIKE”. All these trademarks are effective from 2022 to
2033. In addition, we have applied for trademark rights for the name “FLY E-BIKE” in Canada, and the application is currently
pending.
Other than the trademarks mentioned above, we
do not own any patents, copyrights or other intellectual property registrations in the United States. We plan to seek further intellectual
property registrations in the United States in the future. We currently also seek to protect our trade secrets and other proprietary
information through common law copyright and trademark principles.
Competition
There are numerous companies that sell E-bikes,
E-motorcycles and E-scooters in the United States and even more globally. The markets for EVs are highly competitive based on a number
of factors, including innovation, performance, price, technology, product features, styling, fit and finish, brand recognition, quality
and distribution. We believe our ability to compete successfully in these markets depends on our ability to capitalize on our competitive
strengths and build brand recognition.
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Many companies, which have greater financial and
marketing resources than us, make electric two-wheelers, including Trek Bicycle Corporation, Specialized Bicycle Components, Inc., Specialized
Bicycle Components, Inc. and Rad Power Bikes Inc. While we believe we are well positioned in this competitive market, there is no assurance
that our vehicles will be successful in the respective markets in which they compete. See “ Item 1A. Risk Factors — Risks
Related to the Company’s Business, Operations, and Industry — The markets in which we operate are in their infancy
and highly competitive, and we may not be successful in competing in this industry .”
Regulation
We are subject to a wide variety of laws and regulations
in the United States. These laws and regulations govern various items directly or indirectly related to our business, such as labor
and employment, anti-discrimination, product liability, vehicle defects, vehicle maintenance and repairs, personal injury, rider text
messaging, service payments, consumer protection, taxation, privacy, data security, intellectual property, competition, terms of service,
mobile application accessibility, insurance, money transmittal, and environmental, health and safety. They are often complex and subject
to varying interpretations, in many cases due to their lack of specificity. As a result, their application in practice may change or develop
over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal,
state, and local administrative agencies.
The micromobility industry is relatively nascent
and rapidly evolving. New laws and regulations continue to be adopted, implemented, interpreted and iterated upon in response to our growing
industry and associated technology. As we expand our business into new markets or introduce new offerings into existing markets, regulatory
bodies or courts may claim that (i) we are subject to additional requirements or (ii) we are prohibited from conducting our
business in certain jurisdictions.
Our products may also be subject to various environmental,
health, and safety regulations, including, but not limited to, those regarding product safety and waste management. For example, we are
subject to environmental laws and regulations regarding the handling and disposal of hazardous substances and solid wastes, including
electronic wastes and batteries. These laws regulate the generation, storage, treatment, transportation and disposal of solid and hazardous
waste, and may impose strict, joint and several liability for the investigation and remediation of areas where hazardous substances may
have been released or disposed. For instance, the Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended (“CERCLA”) and comparable state laws impose liability, without regard to fault or the legality of the original
conduct, on certain classes of persons that contributed to the release of a hazardous substance into the environment. These persons include
current and prior owners or operators of the site where the release of the hazardous substance occurred as well as companies that disposed
or arranged for the disposal of hazardous substances found at the site. Under CERCLA, these persons may be subject to joint and several
strict liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural
resources, and for the costs of certain health studies. CERCLA also authorizes the Environmental Protection Agency (“EPA”)
and, in some instances, third parties to act in response to threats to the public health or the environment and seek to recover costs
incurred from the responsible classes of persons. In the course of ordinary operations, we, through third parties and contractors, may
handle hazardous substances within the meaning of CERCLA and similar state statutes and, as a result, may be jointly and severally liable
for all or part of the costs required to clean up sites at which these hazardous substances have been released into the environment.
We may also be subject to the Resource Conservation
and Recovery Act (“RCRA”) and comparable state statutes for the generation, storage, or disposal of solid wastes, which may
include hazardous wastes. RCRA regulates both solid and hazardous wastes, but, in particular, imposes strict requirements on the generation,
storage, treatment, transportation and disposal of hazardous wastes. In addition, federal and state laws may require or otherwise regulate
the reuse and recycling of batteries, including lead-acid and lithium-ion batteries, used in our products.
Certain of our products are also regulated by
the U.S. Consumer Product Safety Commission (“CPSC”) pursuant to various federal laws. CPSC can require the manufacturer
of products containing a safety defect to recall or repurchase such products and may also impose fines or penalties on the manufacturer.
Similar laws exist in some states, cities, and other countries in which we sell our products.
Certain of our products are also regulated by
the National Highway Traffic Safety Administration (“NHTSA”) pursuant to various federal laws and regulations. NHTSA can require
the manufacturer of motor vehicles or motor vehicle equipment containing a safety defect to recall or repurchase such products and may
also impose fines or penalties on the manufacturer. Certain of our products are also regulated by EPA, and the California Air Resources
Board (“CARB”) for products sold in California. EPA and CARB can require the manufacturer to recall or repurchase vehicles
that are uncertified or that contain an emission-related defect and may also impose fines or penalties on the manufacturer.
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In addition, some of our products may be subject
to local laws and regulations. For instance, in March 2023, the New York City Council amended its administrative code to require
that all powered bicycles, powered mobility devices including electric scooters, and storage batteries for such mobility devices distributed,
sold, leased, rented, or offered for sale, lease, or rental in New York City must be certified as compliant with the applicable Underwriter
Laboratories (UL) standard, which is a widely recognized standard for safety in electrical products in the United States. The law
became effective in September 2023.
Additionally, because we receive, use, transmit,
disclose, and store personally identifiable information and other data relating to users on our platform, we are subject to numerous local,
municipal, state, federal, and international laws and regulations that address privacy, data protection, and the collection, storing,
sharing, use, transfer, disclosure, and protection of certain types of data. Such regulations include the Controlling the Assault of Non-Solicited
Pornography and Marketing Act, the Telephone Consumer Protection Act of 1991, the U.S. Federal Health Insurance Portability
and Accountability Act of 1996 and Section 5(a) of the Federal Trade Commission Act of 1914.
We plan to sell and distribute our vehicles internationally
through international distributors. As such, we will be subject to the local laws of each jurisdiction in which we sell our vehicles.
These regulations may result in increased costs and expenses, which may materially and adversely affect our business, results of operations
or financial condition.
Employees
As of June 27, 2024, we had 84 employees, consisting
of 57 full-time employees and 27 part-time employees.
Our employees are not represented by a labor organization
or covered by a collective bargaining agreement. We believe that we maintain a good working relationship with our employees and to date,
we have not experienced any significant labor disputes.